Pakistan Global Sourcing Guide

PAKISTAN

H

ARC E S E R Y R T N U CO

Samantha Franco - FASM 420 - Prof. Donald Levy

S T I A R T Y R T N U O C Capital: Islamabad Founded: August 14, 1947 Prime minister:Nawaz Sharif President: Mamnoon Hussain Population:191million Official languages: Urdu, English

(“VANISHED EMPIRES.”)

SOME KEY DATES IN PAKISTAN’S HISTORY 1947 - Muslim state of East and West Pakistan created out of partition of India at the end of British rule.

1948 - First war with India over disputed territory of Kashmir.

1971 - East Pakistan attempts to secede, leading to civil war. India intervenes in support of East Pakistan which eventually breaks away to become Bangladesh.

1999 - Army chief Pervez Musharraf seizes power in coup, ousting Prime Minister Nawaz Sharif.

2007 - Former Prime Minister Benazir Bhutto is assassinated while on campaign trail for 2008 parliamentary election.

2013 - Nawaz Sharif becomes prime minister for third time after his Muslim League party wins parliamentary elections. (“Pakistan GDP Growth Rate)

Y T I L I B A T S Y R T N U CO POLITICS Pakistan n in considered a democratic parliamentary federal republic with Islam as the state’s religion. It is a multi-party parliamentary system with an apparent division of liability and power between branches of the government.

Politics have been focused and dictated by the native accredited social philosophy that is made of their ideas about socialism, conservatism and the third way . The main political parties consist of the Center-right conservative Pakistan League-N , the centerleftside socialist Pakistan Peoples Party and the Centrist and Third-way Pakistan Movement for Justice (Pakistan Politics: Key Players)

ECONOMICS

Pakistan is considered a developing country and one of the Next Eleven countries, meaning is has the potential to become of the world’s largest economies of the 21st century Yet, after, many years at war and social vulnerability, things such as transportation, electric power have been greatly affected negatively.

However, Pakistan has a semi-industrialized economy. Its primary exports include , leather, sport goods, textiles, chemicals and tapestries.

Pakistan’s economy is the 26th largest in the world in terms of purchasing power parity and the 38th largest country in terms of nominal Gross Domestic Product. Their GDP per capita is $4,993 which makes them the 133th country ranked in the world. (“Pakistan.” Economy: Population”)

EDUCATION

(“Pakistan Orders Save the Children’s Foreign”)

- Pakistan has one of the worst education indicators in the world - It has the second highest number of children that do not attend school. It reached 5.1 million in 2010 -Over 3 million girls do not attend school -They are the third country with the largest illiterate population. 50 million adults are illiterate and two-third are women.

-17% of the population never went to school in Punjab, 25% in Khyber and 37% in Balochistan (Pakistan Orders Save the Children’s Foreign Workers)

Pakistan and the US have a confident two-way economic and commercial relationship of about 5.3 billion which was estimated in 2013. U.S is Pakistan’s largest trading partner and its leading source of foreign direct investment. On the other hand, Pakistan is only a modest market with suppliers exporting goods and services worth 1.65 billion to the U.S. The U.S accounted for 15% of total exports with a value of 3.68 billion dollars and was the largest export market for Pakistan.

S S E N I S U B UCT D N O C HOW TO INTRODUCTION AND GREETING -In Pakistan there is a strong combine-family system. Elders are respected greatly whether they are family members, acquaintances or strangers.

-All guests are honored. “ Guest is a blessing of God”, is a saying in Pakistan -Pakistan is so stranger-friendly that everyone feels free in communicating with others.

-It is considered rude to introduce yourself to strangers, it is generally advisable to have a mutual party introduce you.

Strangers will speak with each other in the “formal” register of Urdu.

-People of opposite sex do not shake hands when they greet each other. -It is sometimes usual among men to put their right hand on their chest (heart) after shaking hands -In urban Sindh and in other parts of the country, men and women usually lower their head and lift their hand to their forehead to make the “adab” gesture when greeting each other.

-It is advisable to ask a person how they wish to be addressed ( “Doing Business in Pakistan)

BUSINESS MEETINGS -English is generally spoken and understood in major cities.

The local dilect is called Pakistani English -It is advice not to schedule meetings during Ramadan. During this time work days are shorten, Muslims fast and therefore, won’t be able to offer you tea which is a gesture of hospitality -Meeting are not scheduled at namaz time. ( “Doing Business in Pakistan )

( "Pakistan Receives Indian Proposal)

N O I T UC

D O R P F O E IM T D LEA

- Western Disturbances mostly occur during the winter months and it is because light to moderate showers in southern parts of the country happen while moderate to heavy showers with heavy snowfall occur in the northern parts of Pakistan.

-Fog occurs during the winter season in upper Sindh, central Khyber Pakhtunkhwa and Punjab. This can last for weeks at a time.

-Southwest Monsoon arise in summer from the months of June to September and reach most of the country. They usually end up with major flooding.

-Tropical storms season is during the months of April until June and then from late September until November. They normally only affect the coast.

-Dust storms occur during summer months as well, with May and June being the months when they normally happen. They are locally known as Andhi.

-Heat waves happen southern Punjab, central Balochistan and interior Sindh.

Apparel & Textile Industry Pakistan’s largest industries are their Cotton textile productions and apparel manufacturing which accounts for about 66% of the merchandise exports. Overall, Pakistan is the 8th largest exporter of textiles in Asia and is the 4th largest producer of cotton with the 3rd largest spinning capacity in Asia, China and India being number one and two. The city of Punjab dominates the textile industry and about 40% of the employed labor in the country comes from this industry. The buying of cotton has increased by 5.7% over the last five years while the overall economic growth rate of the country has been 7%. The textiles exports reached 15.5 billion dollars in 2010 as a result of the the spinning amplitude being raised to 15 million spindles. Pakistan contributes to 5% of the global spinning capacity. (“Pakistan GDP Growth Rate) One of the factors that contributes to the decline of the textile export in Pakistan in the government’s unhealthy polices concerning this industry. In addition, in 2014 the Sui Northern Gas Pipelines Ltd. decided to cut the textiles mills their supply of gas due to a shortage over a period of five months.

This affect production of textile in Pakistan greatly because the demand for it kept growing but they were not able to deliver.

TOP SUPPLIERS Casual Sprots Wear: Denim , Woven, Pants Clients: H&M and Mauritz Premium Knits Cotton, Knits Men Clients: Footlocker, Sears http://premiumknits.com.pk/ Fashion Trends Limited Apperal Seuce and fleece Client: American Eagle infotrends.com US Apperal and Textiles cotton Denim and ready made Client: Levi Strauss Co. usaaperal.com,pk

(“Pakistan Receives Indian Proposal”)

Service Providers Hapag Lloyd KLine NYK Yang Ming

Ports Port Muhammad Bin Qasim

Average Lead Times Hapag Lloyd: 24 days to NYC NYK 28 days to NYC 40 days to NYC

Cost of Shipping a 40 ft Container: 3,681-5,305

N.p., n.d. Web.

TRADE AGREEMENTS Regional / Bilateral Trade Agreements Pak-Afghanistan Transit Trade Agreement Agreement on South Asian Free Trade Area Pak-Malaysia Trade Agreements Pak-China Trade Agreements Pak-Sri Lanka Free Trade Agreement Pak-Iran Preferential Trade Agreement

Pakistan and the U.S started negotiating a bilateral investment treaty in 20014. This is an agreement that establishes terms and conditions for private investment by nations and companies of one state to another. In this agreement, included topics are fair treatment, protection from expropiatiosn, full protection and security. (“Bilateral Investment”)

Pak-Mauritius Preferential Trade Agreement Pak-Indonesia Preferential Trade Agreement

(“Bilateral Investment”)

RAW MATERIAL BASE: Pakistan is the fourth largest producer of cotton leading it the textile industry there to move towards the area of industrialization. Overall, they are highly self-sustainable in raw materials.

LABOR: Pakistan’s economy has always relied on its cheap labor. Not only is it cheap but the labor force is large as many people need jobs. Consequently, the cost of production is low.

DOMESTIC MARKET: The recent shift of the population from the agrarian industry to the urban areas has increased income levels and growth in the population raising the domestic demand. This means more factories more manufacturing units, more supply and more labor. (N.p., n.d. Web.)

BENFITS & RISKS MORE DEPENDENCE ON COTTON:AS the demand for cotton grows, the limited cultivation of cotton will deteriorate the textile industry. Pakistan lacks competence in the development, production and marketing of synthetic fabrics which are required to make garments such as sportswear and swimwear. Leaning on this on single crop economy is restricting the diversification of exports from Pakistan. As of now, Pakistan has been incapable to variegate in the export of textiles, thus, extremely dependent the cotton and its blends POOR INFRASTRUCTURE: The building where garments are being produce lack the important resources and basic infrastructure such as enough water, electricity, gas supply, adequate transportation, raw material supply and tax structure. They are also facing the increase in charge for energy which will lead to the production costs.

POOR QUALITY STANDARDS: Except for large corporations who adhere to the global quality standard, most of the other companies do not ensure this kind of quality. Factories are chosen because they are cheaper the other ones and quality of their machinery and product are not a major concern. Pakistan needs to start focusing on the latest techniques and machinery as well as training their workers. If this does not happen in the near future rivals will take a lead over Pakistan.

UNSTABLE POLITICAL SITUATION: Political tumult, strikes and terrorism have had a negative impact on the economy of Pakistan. As the government is constantly changing it has adversely blotched the policies of the textile sector.

(N.p., n.d. Web.)

WORK CITED “Bilateral Investment Treaties and Related Agreements.” U.S. Department of State. U.S. Department of State, n.d. Web. 27 Oct. 2015.

“Doing Business in Pakistan - World Bank Group.” Doing Business in Pakistan - World Bank Group. N.p., n.d. Web. 27 Oct. 2015.

“Pakistan | United States Trade Representative.” Pakistan | United States Trade Representative. N.p., n.d. Web. 27 Oct. 2015.

“Pakistan GDP Growth Rate | 1952-2015 | Data | Chart | Calendar | Forecast.” Pakistan GDP Growth Rate | 1952-2015 | Data | Chart | Calendar | Forecast. N.p., n.d. Web. 27 Oct. 2015.

“Uncertain Prospects for Pending U.S. Bilateral Trade Agreements.” The American Journal of International Law 101.4 (2007): 880-81. Web. N.p., n.d. Web. “Pakistan Receives Indian Proposal, Not Yet Confirm Meeting in New Delhi.” DailyTimes. N.p., n.d. Web. 27 Oct. 2015.

Pakistan Orders Save the Children’s Foreign Workers Out of the Country.” Public Radio International. N.p., n.d. Web. 27 Oct. 2015.

“VANISHED EMPIRES.” : New Release: The Struggle for Pakistan

by Ayesha Jalal. N.p., n.d. Web. 27 Oct. 2015.

“Pakistan Receives Indian Proposal Pakistan Apparel Sourcing Project Seeks Partners. N.p., 13 Jan. 2014. Web. 27 Oct. 2015.

“Pakistan Politics: Key Players - BBC News.” BBC News. N.p., n.d.

Web. 27 Oct. 2015.

“Pakistan.” Economy: Population, GDP, Inflation, Business, Trade, FDI, Corruption. N.p., n.d. Web. 27 Oct. 2015.